Vail Daily column: Health coverage realities
November 6, 2013
Like many, I had hopes for Obamacare. I've seen the ruin that being medically uninsured can bring in the form of catastrophic medical bills to a few people I have known. As a self-employed individual, I have always struggled to find affordable insurance and bit the bullet many times as premiums marched upwards and coverage seemed to get smaller and smaller.
I had hoped that with the advent of Obamacare I could find better coverage, and hopefully for a little bit less money or at least not much more. When the websites opened, I searched to see what my options would be and, like many who are classed as living in a resort area, was shocked.
As we are in a resort area and have little competition for health care services, we are in an insurance premium bubble. Currently, as a 59-year-old nonsmoking male, my existing coverage on an individual policy is $327 per month with a $5,000 deductible and an $8,500 out-of-pocket maximum and a little bit of prescription coverage.
Under the Affordable Care Act, I will have the option to continue that coverage (my carrier estimates I will see a 10-20 percent increase) for up to one year or buy new coverage individually or through the online market place. A new policy with less coverage would cost me between $800 to 900 per month — nearly triple. As far as drug coverage, that is now a separate $5,000 deductible. If I resided in Denver, that policy would cost about $400 per month.
As I make too much money to qualify for the tax credit subsidies (which are capped at making $64,000 for my family of two) I'm going to be paying full boat.
What many do not realize (and there has not been a word in the media that I have seen) is that those with individual policies must confirm with their insurers before the end of the year that they will be keeping their current policies. There apparently is no automatic renewal — it must be a written confirmation initiated by the insured to continue their coverage.
In my case, my insurer (Anthem) requires that a form they are going to be mailing out be faxed back to confirm my intent to continue coverage. I can't call them, do it online or mail it in, fax is the only way. If I don't do that, my coverage will be canceled and instead of paying a 10-20 percent increase, I will have to take out a new policy at nearly triple the cost.
Further, come Jan. 1, 2015, everyone with an individual policy will have to either purchase a new plan directly from the insurer or through the online exchange (at probably close to triple the cost). Beware that at this point, unless you purchase through the exchange, you won't get the tax credit, assuming you qualify for it.
So what does this mean for a middle class family in Eagle County who make more than four times the poverty level (currently about $94,200) and have to buy their own insurance? I priced online what a basic plan would cost using the calculator on http://www.connectforhealthco.com and the premium will start at $2,042 per month and that is paid out of pre-tax income.
So if a couple had two children and $95,000 per year income, they would be paying 26 percent of their pre-tax income for health insurance. That is equal to a mortgage payment on a $415,000 mortgage. Alternatively, they could pay 1 percent of their income ($950.00) as a penalty for not being insured and take their chances. Do they pay the insurance or the mortgage payment?
But what does an uninsured person pay for an ACL surgery? Probably $40,000. A stroke? Try $200,000 for the basics. A heart attack? Let's say it's enough to give you a stroke on top of your heart attack. Cancer? You don't want to even think about it, but hang onto your car because you might end up living in it.
For a middle class family to pay 26 percent of their pre-tax income for insurance that now will cost about triple what they had been paying is a crushing expense. Do they face catastrophic medical insurance premiums or chance a catastrophic medical bill? This has the strong potential to create an entirely new class of middle class and upper middle class people who will become the new uninsured, most of whom have probably had insurance their whole life.
If a family of four makes less than $94,200 they will find the insurance pretty cheap. While the subsidy is termed a tax credit, it is really a subsidy. If you owe less federal taxes than the tax credit is, your federal taxes are wiped off and the balance that got paid to your insurance company does not have to be repaid. Using the current tax rates, a standard deduction, the standard exemptions and the earned income credit, a family of four making $50,000 per year doesn't generally owe any federal income tax, but they would still get a tax credit of $24,504, which is paid to their insurer to cover all their premiums.
A family of four making up $65,000 per year would also receive the above mentioned coverage for "free," and only owe whatever tax due in excess of their $24,504 credit. A family making $94,200 per year would pay about $300 per month for coverage and owe whatever excess tax above the credit. A family making one cent over that would pay the full cost of $2,042 per month and still owe all their taxes. And this is based on the adjusted gross income, not net taxable income.
And a huge part of the cause is the cost of health care here. Many procedures are double or triple the cost of getting the same thing done in Denver. Not long ago, I needed a MRI on my knee and Vail Valley Medical Center wanted about $1,500 to do it. I called around and got it done for $500 in Denver. The insurance companies know this, and set our premiums accordingly at double or triple other areas.
Chris Neuswanger lives in Edwards